Case in Point: Repealing the eVAT?

This is a point I want to bring across.  Sometimes when luminaries of an entirely different field, like former Justices of the Supreme Court, for example, try to lend their brilliant legal minds to matters of fiscal policy and economics,  things just don't jive.

Remember when the Supreme Court Justices (I'm not sure  which way Justice Cruz voted in this case, or if he even was part of the decision)  to keep ownership of the Manila Hotel in Filipino Hands, which said decision in turn rejected the winning bid of an otherwise prestigious international  conglomerate?  Manila Hotel then fell onto the lap of Mr. Yap, owner of Manila Bulletin. 

Where is Manila Hotel now?  I think many of you would share my observations of how Manila Hotel, once in the ranks of the world's most luxurious,  prestigious hotels, is now in a very sorry, embarrassing state.

And so we go back to why exactly I am writing this entry.  Justice Cruz, is opining that the eVAT law be repealed.   Does he demand of this because he has indepth knowledge that doing so would be good for the economy?   Does he mean repealing the entire Value Added Tax law or just the expanded part of it? In the case of the latter, it would only mean, a 2% difference, because the original VAT is still pegged at 10% after all.   This then brings us to the question, of how big a difference will it make if we repealed the expanded 2%?

Does he not realize that probably because of the eVAT, we are now better off in terms of fiscal balance and in dealing with the current Global Financial Crisis that's been ripping the western hemisphere like a shockwave?  

Corruption this, corruption that, 6 million dollars for the Generals who went to Moscow, yadda yadda,  . . . does that make an argument to disassemble an entire fiscal structure?  

I don't have the answers but I have these questions.  

Repeal the expanded VAT

By Isagani A. Cruz
Philippine Daily Inquirer
First Posted 23:43:00 11/01/2008

THERE is widespread disgust with the expanded VAT from all elements of the people, especially the senior citizens whose statutory benefits are negated by the oppressive law. For example, my wife bought medicines worth P2,703.57 that was reduced because of her age to P2,162.86 but in the same transaction was subjected to the expanded VAT of P259.54, making the total cost of her purchase P2,422.40. This lessened the 20 percent benefit required by the Senior Citizens Law to only 8 percent, wiping out as much as 12 percent of the original discount by only an implied amendment or repeal, which is not favored in law.

It is not only the senior citizens who are adversely affected. Even an ordinary meal advertised for only so much in the restaurant menu may embarrass a person who has ordered it with just enough of the indicated cost but is later also charged the expanded VAT. He may plead that he is only an ordinary wage earner with limited means but that does not excuse him from paying the additional tax that was authored by former Sen. Ralph Recto, whose grandfather would surely have opposed such an awkward exaction.

I imagine Don Claro would have dismissed the administration’s stupid excuse that the expanded VAT is necessary for the increased cost of government. We have enough other taxes except that they are not being paid by the powerful slackers who can invoke various pretexts for evading their lawful share in the upkeep of the government. The honest ordinary people do not enjoy that illegal convenience. It is the ordinary people, most of them from the middle class, who are directly prejudiced by the additional tax that is automatically imposed when they engage in ordinary activities like buying food and hiring services.

What makes the expanded VAT especially objectionable is that, contrary to its announced purpose, it is not being spent for “the increased cost of government,” as piously argued by its defenders. That apologia is a lie as everybody knows. Much of the expanded VAT we are paying is consumed for spendthrift purposes, like Gloria Macapagal-Arroyo’s junket to the United States last June. She delivered a speech at the United Nations that nobody listened to except her many pampered companions whose only function was to act as her claque. The cost of that excursion exceeded P50 million of public funds.

Only recently, the public that has been inured to the scandals of our public officials was still shocked by the incredible disclosure of the prodigal bounties given to the members of the Philippine police delegation in their over-priced but overrated mission to Russia. They could have kept their excessive allowance a dark and improvident secret were it not for the efficient inquisitiveness of the customs inspectors in that country.

The money involved in this latest exposé is the P9.2 million that an eight-man delegation from the Philippine National Police carried for its six-day attendance at the 77th Interpol General Assembly. Some of the delegates were accompanied by their wives. The specified sum for their official expenses was P2.3 million, but they also had the undeclared “contingency fund” of P6.9 million, consisting also of the proceeds from various taxes, including the expanded VAT dutifully paid by the less privileged among us. Their already retired comptroller said that Russia was an “expensive country,” as if to explain their extraordinary privileges for incidental expenses like shopping adventures and nocturnal entertainment at the ballet or elsewhere.

Unlike many inquiries conducted by the Senate that started with a bang but languished with a whimper, the investigation of their extravagant escapade swiftly ended on a positive note. After its one and final hearing, the committee on foreign affairs recommended the prosecution of the superior officers of the Philippine National Police for the grotesque offenses they have committed probably with the also guilty permission of the interior secretary. Congratulations to Sen. Miriam Defensor-Santiago, chair of the investigating committee, and its other valiant members, for denouncing another band of vultures plundering the national treasury.

It is almost comical that the respondents are now claiming that the contingency fund entrusted to them was for the purchase of military and spy equipment, as if these were available at some talipapa in Moscow. And don’t laugh if they next refuse to say more on the ground that their defense is a national security secret covered by the executive privilege of their commander in chief. Also, mind you, the Supreme Court might agree.

To go back to my original gripe, part of their loot must have come from the proceeds of the expanded VAT that I hope will also be criminalized. Taxation must be exercised with a humane appreciation of the capacity of the people to cope with its requirements, not for the unfeeling need to raise revenues that are mostly used not to serve public needs but to cater to private caprices disguised as official functions. That is the rule in this country, where the majority of the people are exploited to indulge the pleasures of the untouchable few.